Obama's pick of Cordray to lead consumer agency draws mixed reactions

Plain Dealer fileFormer Ohio Attorney General Richard Cordray, announced as President Barack Obama's pick to head up the fledgling Consumer Financial Protection Bureau, has gained a national reputation for his work on mortgage fraud.

Cordray, 52, gained national recognition for his work on mortgage fraud and has been working as the head of enforcement for the bureau since December. By appointing him, however, Obama skipped over Elizabeth Warren, interim head of the bureau, its architect and a consumer group favorite.

"We're obviously disappointed it's not Elizabeth Warren, but we believe Rich Cordray will be a very strong director," said Ed Mierzwinski of the U.S. Public Interest Research Group.

Cordray moved from the Ohio treasurer's job in 2009 to take over the unfinished term of Marc Dann, who left the Ohio attorney general's office in disarray. But Cordray was then defeated by former Sen. Mike DeWine in the November 2010 election.

Still, in just two years in the attorney general's post, Cordray became known as a fierce foe of Wall Street shenanigans and won back billions for Ohio pension funds that lost money during the bank meltdown.

"Richard Cordray has spent his career advocating for middle-class families, from his tenure as Ohio's attorney general, to his most recent role as heading up the enforcement division at the CFPB and looking out for ordinary people in our financial system," the president said Sunday in announcing Cordray's nomination.

Cordray, reached at his home in Ohio on Sunday, said he couldn't discuss the nomination before today's 'news conference. He has split his time between Columbus and Washington since being named to head the bureau's enforcement.

If confirmed by the Senate, Cordray would be in charge of a new federal agency that aims to restrict unfair, deceptive or abusive credit practices, promote financial education and investigate consumer complaints.

In selecting Cordray, Obama sidestepped a threatened Republican filibuster of Warren, considered too outspoken and liberal by Republican lawmakers.

Although anyone would be more palatable to Republicans than Warren, whom they reviled as anti-bank, it's unclear whether Cordray could be confirmed, either.

In May, 44 of 46 Republican senators sent a letter to Obama threatening to block any nomination hearing, regardless of the candidate, unless the White House agreed to:

• Switch the bureau's funding from the Federal Reserve, which pays its own way through investments, to the appropriations process, which would make its budget easier for Congress to cut.

• Change the bureau's leadership from a director to a panel.

• Make it easier for an oversight bureau made up of bank regulators to jettison the bureau's rules.

Sen. Rob Portman, a Cincinnati Republican, said Sunday that he looks forward to hearing Cordray's views on how the bureau can be made more accountable.

"As it's designed today, CFPB effectively writes its own rules, sets its own budget, and has unprecedented power to restrict consumer choices," Portman said. "I believe it needs reasonable checks to ensure it does not lead to job loss and harm to the consumers it was created to protect."

Consumer groups have said the Republicans' demands are an effort to weaken the bureau and delay its opening. Obama said last week that he would veto any bill that would undermine the bureau's independence.

The agency, established by financial reforms passed by Congress, will write rules and guard against abuses that ensnared some consumers and contributed to the problems Americans have faced with their personal finances. Its authority will include mortgages, credit cards, consumer and student loans and other forms of consumer credit.

Technically, the bureau will be up and running Thursday.

However, without a director, the bureau has limited powers to create and enforce unfair and deceptive practices that would apply to currently unregulated financial companies, like payday loan stores and nonbank finance companies.

Today's nomination doesn't immediately change those limitations. A director must be in the job, either through confirmation by the Senate or through a recess appointment, to get those powers. Senate Republicans have vowed to block either a confirmation or appointment.

Consumer groups had become increasingly frustrated with the president's failure to make an appointment. Some openly advocated Warren's appointment, but as the bureau's opening drew near, became concerned that Obama would try to mollify the Republicans and the banks by nominating someone close to the banking industry.

The AFL-CIO expressed mixed feelings about the appointment Sunday along with an exhortation to the Senate to move forward quickly with the confirmation.

"Without a Director, the CFPB cannot effectively police non-bank financial institutions, including firms such as pay day lenders and mortgage companies that have histories of exploiting working people," union President Richard Trumka said in a written statement. "We sincerely hope Republicans will drop their super-partisan efforts to block staffing of the agencies essential to enforcement of Wall Street reform and consumer protection."

Sen. Sherrod Brown called Cordray a "great" pick and said he hopes the confirmation process is quick. Brown also praised Cordray's consumer-oriented focus as state attorney general.

Follow Us

cleveland.com is powered by Plain Dealer Publishing Co. and Northeast Ohio Media Group. All rights reserved (About Us).The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Northeast Ohio Media Group LLC.